The provisions of section 10(35) of the Income Tax Act exempts income received from the specified units. The exemption provisions of section 10(35) are taken up and explained in the current article.
Exemption provisions of section 10(35) of Income Tax Act–
The provisions of section 10(35) offer exemption towards the following-
1. Any income arising in respect of the units of the specified mutual fund; or
2. Any income arising in respect of the units from the Administrator of the specified undertaking; or
3. Any income arising in respect of the units from the specified company.
Thus, in case the income falls within the criteria mentioned above, the entire income arising from such a unit is exempted under section 10(35) of the Income Tax Act.
Meaning of the term ‘mutual fund’; ‘administrator’ and ‘specified company’-
1. Mutual fund means units specified under section 10(23D) of the Income Tax Act.
2. Administrator means the Administrator, as referred under section 2(a) of the Unit Trust of India (Transfer of the Undertaking and Repeal) Act, 2002.
3. Specified company means the company as referred under section 2(h) of the Unit Trust of India (Transfer of the Undertaking and Repeal) Act, 2002.
It is very important to note here that exemption under section 10(35) of the Income Tax Act shall not be available to income arising in respect of units received on or after 1st April 2020.
Cases under which provisions of section 10(35) doesn’t apply-
The proviso to section 10(35) states that exemption provision doesn’t apply-
1. In case of the income arising on the transfer of the mutual fund; or
2. In case of the income arising on the transfer of the units of the Administrator; or
3. In case of the income arising on the transfer of the specified company.
Table – Articles on Section 10 Exemptions
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Please let me know the tax treatment in respect of income i.e. dividend from Mutual fund for AY 2021-22 which was previously exempted u/s.10(35) of the IT Act.